Sandbagging Q2 and my thought on Q3, Q4
I can't take it anymore. Seeing Jeff post over here finally pushed me over from the Yahoo board.
Jeff:
<<I think they sandbagged some sales at the end of the quarter, used V 1.5 as an excuse, and if you were to check inventory on July 7 you would have seen a big drop. Did you notice how sales increased EXACTLY down the middle of their guidance 15-20%? >>
This was a major concern of mine too. Rather than try to guess at conspiracy theories I got the answer from Zacarias. I asked him directly about pushing sales over. Here was his response:
"Pat,
DSOs for the quarter were approximately 61 days. Nothing unusual with sales activity at the end of the quarter. Shipments went out as scheduled for both the last week of June and the first week of July. Thanks for the recognition on the quarter,
Dave"
That said, it was very curious that nobody probed a little further into the inventory problems. My personal opinion on the Voodoo 1.5 is that it was intended to bring the price down a little bit to reach a new market. The falling DRAM prices did that for them anyway, making it unnecessary to create a new product line. The company probably also took note that 12MB Voodoo2's were consistently outselling 8MB. This is an indication of a performance inelastic market. People want the best.
Unfortunately, the fact that people want "the best" doesn't bode well for 3Q. If TNT lives up to even half of its expectations then there will be a shift from the performance crowd. Since 3dfx is expecting flat earnings, this shift may be large enough to actually have 3dfx disappoint. Banshee must be the filler here. If Banshee doesn't pick up the slack then 3dfx will be in trouble. Good thing 4Q looks much better.
4Q is a no brainer. If you don't think they can make 10% growth during the Christmas season take a look at some of these charts. Holiday season in the gaming industry appears to yield 50%-75% revenue growth from the previous quarter. Why should 3dfx be any different? Unlike some other graphics companies 3dfx is shooting almost exclusively at the gaming industry. I bet Voodoo2 is already on a lot of Christmas lists.
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BTW, a revenue increase of 50%-75% would put us in the $1 earnings range. If anyone can think of a reason why my analogy is flawed, I would love to hear it.
Pat
P.S. Great stuff here guys. Keep the quality up.
P.P.S. We didn't hear anything about Voodoo 1.5 until it was canned. Makes me wonder what else they have up their sleeves. |
